Shared owner rights

Shared ownership leases

Shared ownership is a government backed scheme to encourage home ownership.

Shared owners have a fixed-term assured tenancy with a social housing landlord, this tenancy is classed as a lease because it has an initial term of at least 99 years. Shared owners pay a premium for the lease as a fixed amount of the property value (10-75%) to the landlord. They usually pay for this with a mortgage. They can increase the amount they pay to the landlord during the term of the lease up to 100%; this is called staircasing.

Shared owners pay rent to the landlord based on the remaining value of the lease (the part not paid for by the premium). Rent is normally 3% of the landlord’s share of the property value.

Shared owners are responsible for repairs in their homes and their lease will normally require them to pay service charges to cover the costs of maintenance and improvements to the property.

Homes England produces model leases for the landlords to use, that contain all the fundamental clauses. Fundamental clauses are the terms that must be included in the lease for the scheme to qualify for government funding. The fundamental clauses include:

• the right of a shared owner to buy the property in increments
• protection for the mortgage lender’s security
• restrictions on subletting
• rules for rent reviews

Subletting your shared ownership home

Subletting the whole of your shared ownership home is prohibited, although your landlord may consider a request to sublet in certain circumstances. These include the:

• reason the shared owner needs to sublet is unavoidable
• subletting is not for speculation or gain
• the sub-lessee meets the criteria for shared ownership
• the shared owner is subletting the property on a fixed-term agreement
• you will also need the consent of your mortgage company before subletting the whole of the property

Selling your home

If you want to move house you can sell your lease at any time. You must inform your landlord in writing that you want to move; your landlord can either sell the lease for the amount they have paid a premium on, or buy the remaining share and then sell the property outright.

Succession rights to a shared ownership home

If a shared owner dies, the part of the property that is owned passes to the beneficiary of the will. The rented part passes to any successor. Where these two people are different, the tenant (successor) has the right to occupy and the beneficiary has the equitable interest, which would only be realised when the property is sold.